Over a year after voters rejected a sales tax increase to bring ASU to downtown Mesa, the city council has approved a new plan to do just that – albeit with a smaller footprint and no new taxes.
Phase one of the new plan will see the city of Mesa fund the design and construction of a 100,000- to 125,000-square-foot building for ASU near City Hall on Centennial Way between Main and First Streets.
The city is also responsible for infrastructure improvements and other accommodations for students, including a public park space.
“We can’t just do a building and a parking lot. We have to make it an attractive place for college students,” Mesa Mayor John Giles said.
ASU will sign a 99-year lease for the building and pay Mesa $100,000 per year in rent, a figure that drew measured criticism from downtown’s existing higher education tenant Benedictine University.
Benedictine was initially slated to pay the city $533,333 in rent this year, though that number dropped to $283,333 after the city council approved an amendment last year that provided a $250,000 annual rent abatement over the next six years.
“Benedictine University supports the growth of higher education in Mesa, but if in fact ASU is afforded a discounted lease, we humbly request renegotiating our lease for parity with what ASU might enjoy with the city,” said Paula Norby, dean at Benedictine University’s Mesa campus.
The City Council approved the agreement by a vote of 5-2 at its meeting on Feb. 26. Councilmen Kevin Thompson and Jeremy Whittaker cast the two dissenting votes.
The meeting drew over 20 public comments, with over half in support of the project.
Several local business owners, including Craig Lohman of Lohman Company and Sean Huntington of Mezona Market, spoke in favor of the project.
“I believe this opportunity we have to bring ASU downtown will be a huge win for Mesa,” said Huntington, adding that one of his biggest challenges is finding local talent.
State Sen. Bob Worsley and Phoenix developer Tim Sprague also spoke on in favor of bringing ASU to Mesa. Both men are involved in groups that have made significant investments in buildings in land in downtown Mesa over the past year.
Worsley, who said his group has invested over $20 million downtown, said, “We are putting our money where our mouth is. We are ready for what is happening in downtown.”
At the meeting, both Thompson and Whittaker echoed the sentiments of several members of the public who were against the ASU project in emphasizing that Mesa voters voted down the chance to bring ASU to downtown Mesa in 2016.
“If this is something we truly want, then it should go back out to the voters for their approval,” Thompson said.
Thompson added that the money could be better spent bringing a fire station to the Eastmark neighborhood or a library to his district in southeast Mesa, a point first brought up at the council meeting by Mesa resident Patrick Key.
Giles emphasized that this proposal differs from the 2016 one in that it will not feature a tax increase and will be funded using utility revenues set aside in the budget for business attraction. Mesa is the largest city in the country with no primary property tax, and it relies on revenues from utilities – which the city owns – to pay for municipal services.
“Every year, we set aside a few million dollars to attract businesses and attract growth to the city so we can continue to grow our utility revenues,” Giles said.
The city currently commits $5 million to $6 million to the fund per year.
At the Mesa City Council meeting, Giles said he would not be interested in the project if it required a utility rate increase.
It is the same revenue source the city drew from for development of the Benedictine University facility, Giles said.
Giles added, “I can’t think of a better target than ASU to attract to our downtown that is going to spin off more businesses, attract more businesses, and be the tipping point that is going to bring people and utility customers to downtown.”
Mesa’s total cost burden for ASU’s building is still unclear, though Whittaker referenced an unofficial figure of $75 million at the city council meeting on Feb. 26. The city and university will collaborate on the budget and master plan.
The previous plans for an ASU campus in downtown Mesa from 2016 carried a price tag of $102 million, but the new facility is roughly half the size of the old project.
Despite the fate of the plan nixed by voters in 2016 and the criticism at the council meeting, Giles is confident that he has the community’s support for the project.
Mesa is hoping to replicate the success Phoenix had when it invested in ASU’s downtown campus. That campus is considered a major contributor to the increased private investment the city’s downtown has seen over the past decade.
“What we saw in downtown Phoenix was transformative,” said Sprague, who developed the Portland on the Park apartment complex in downtown Phoenix.
The new facility is slated to house a new program from ASU’s Herberger Institute for Design and the Arts that would focus on designing experiences by merging film disciplines with other media like video games and virtual reality in order to attract more students from the U.S. and around the world.
“We are trying to fuse a number of different technologies and disciplines within our film and television program and take it to the next level,” said Rick Naimark, associate vice president for program development planning at ASU.
For its part, ASU will be responsible for the operations and maintenance costs associated with the facilities, estimated at $1.3 million annually. The university will also pay approximately $10 million to provide the furniture, fixtures and other equipment needed to outfit the building, according to the intergovernmental agreement between the city and ASU.
The agreement also requires the university to bring 40 faculty and 750 students to the campus within five years. ASU will also provide security for the building.
“The biggest cost is actual delivery of the program with faculty and staff,” Naimark said.
The city approached ASU with the idea for the campus and was motivated by the potential economic impact the university’s presence could have on the area. The downtown segment of the light rail opened shortly after Giles came into office and he felt pressure to make the city’s investment in public transit pay off.
“I remember thinking I have to go out and tell people that this was worth it,” he said.
Giles acknowledged that downtown has made some strides in recent years following the recession, but his ultimate plan to revitalize downtown centers on the development of an Innovation District – a term coined by Washington, D.C. think tank the Brookings Institution – with a higher-education anchor that would promote further private investment.
The city does not have current economic impact estimates for the new project, but Giles points to a study from 2016 as a barometer for what ASU could bring to Mesa. At the time, an economist hired by the city estimated that the economic impact of the ASU campus would have been $5 billion over 10 years, Giles said.
Because the footprint of this campus is roughly half that of the 2016 project, Giles said that he “errors on the side of being conservative” and estimated the impact at $1 billion.
In addition to economic impact, Mesa is actively seeking to bring more higher-education opportunities to its residents.
– Reach Wayne Schutsky at 480-898-6533 or firstname.lastname@example.org.